House #3…our Money Pit:

First let me say that this happened in 1993, so some of the details may have been missed, but the majority of the points are covered.

We made an offer for $76,000 on a house that was remodeled by the owner who we were told was a contractor.   Financing would be a VA Home Loan.  The owners were in the process of dividing the property into 3 lots.  The house was on the first lot.  They were creating 2 flag lots on the back of the property.   The house remodel was not complete, but we were assured it would be complete by the time we were supposed to move in.  Our offer was accepted.  We were told we could move in before we closed (rent from the owners) if need be, because they were waiting for a final plot approval by the city on the property before we could close on the property.  We were told this process was nearly complete.  Everything sounded good to us.  The owners were planning to build new houses behind us.  We thought that would be good for the future value of our home.  Escrow was opened.  We were excited!

  • Lesson #1:  Pay attention to the warning signs. If it sounds too good to be true, it probably is!

We were verbally told the unfinished kitchen cabinets were going to be stained a clear blue-gray (this was not in writing).  One day we went out to the house to see how the cabinets looked after they were stained.  We were disappointed to see the cabinets were painted an opaque white.  We asked our Realtor why we weren’t told of this change since we were buying the house.  We were counseled that we could risk losing the deal if we make an issue of the matter.  Though we thought we were mislead, we didn’t want to risk delaying our purchase so we let it go.

The completion of the remodel work on the house slowed.  We expressed concerns to our Realtor.  She assured us that the owner promised the house would be ready for us and that it would happen.  We were told the owner had other houses he was working on.  Our moving in date was fast approaching and there still were things that were not done. 

  • Lesson #2:  Get a home inspection!

The VA appraisal came in based on the anticipated completion of the house.  Once it was done, a final needed to done before closing.  Some of the list included a furnace inspection, installation of a dryer vent, and the ceiling over the new family room needed to be properly insulated (the house had been disclosed as having new insulation).  Our lender began pushing to get these things done.

  • Lesson #3:  Don’t move into a house before ownership transfers.

We moved in as if we were supposed to be the owners.  I put up window coverings, blinds, wallpaper borders, bathroom mirrors over the sinks, towel bars, etc.  My husband built a play structure in the back yard for our daughters.  We started to fix some things because we didn’t want to wait for the owner to do the work.

The insulation above the family room turned out to be a bunch of styrofoam tossed all over.  My husband said he could install the insulation if the owner paid for the insulation.  The owner fought this request because he said lt the insulation in there (syrofoam) was superior insulation to fiberglass insulation and didn’t need to be replaced.  The owner reluctantly gave into our request because the lender required it. 

After we moved into the house we found all sorts of problems.  The dryer vent was “installed” but not vented to the outside.  It was vented into the crawlspace–moisture to the crawlspace.  The bathroom fans vented to the attic, not to the outside–moisture to the attic.  The owner fought correcting these issues, so my husband fixed both.  One day I was using the bathroom sink and I heard water running in the bathroom that sounded like it was under the heat vent.  I pulled the vent off the floor and there was NO duct work under the house connecting the vent to the furnace!  I was hearing the water in the bathroom sink drain pipe that was located under the vent. 

Remember the furnace inspection required by the VA Appraiser?  We found out the furnace was not completely installed.  The burner needed to be replaced before it would be approved by the gas company.  Now add to the list hooking up the furnace duct work.  The owner fought this.  We won because the gas company required the repair work and the lender the duct work.

Needless to say, we were upset.  We were pushing to get the house done so we could close.  We had done a lot of work on the house already.  We pushed to find out the status of the plot map.  We found out the plot approval was stopped because the owner didn’t pay the engineer that did the plans.  A lien was put against the property and the owner was trying to work a deal with them to release the plot map to get the process going.  This meant the city approval process had NOT really begun!  We were paying them “rent” to live in an incomplete house and our ownership date was moving farther and farther out.

The owner would promise to come out to work on the house.  He would show up for a couple hours and then leave.  It seemed closing the deal wasn’t a priorty to the owner.  Afterall, they were getting rent from us.  Since we were paying them rent, we decided to use tenant-landlord laws to force the owner to do some of the repairs.

  • Lesson #4:  Talk to the neighbors.  Check out the crime rate and look up registered criminals in the neighborhood BEFORE making offer on a house.

We started talking to our new neighbors.  We found out the owner of our house was doing a remodel job for one of our neighbors.  Apparently they saw him working on the house we were in and hired him to do an addition on their house.  We became friends (allies).  The addition on their house was faulty and they wanted to sue the contractor (the owner of the house we were trying to buy).  We compared stories.  When he left our house, he was going over to their house.  There was a pattern of problems.

One of our neighbors that lived in a little rental house next door had frequent, loud, domestic disputes at all hours.  There were always a lot of different people going in and out of the house.  One day I saw their oldest child playing with a large knife outside my window.  I called child services and reported them.  These were my neighbors?  My children’s peers?  I hoped they would move away.

We were beginning to think the deal was not going to happen.  We wondered if we should walk away from the house, take our losses and move on.  Our closing date was now over a month ago with no closing date in sight.  Housing prices were slowly going up.  If we walked away from the deal, we were sure the owners would relist the house for more money.

  • Lesson #5:  Put an escape clause date and time in your sales contract.

Through it all, our Realtor assured us things would work out.  Our breaking point was the day I came home from work to see our fence had been bulldozed and removed!  The owner took the fence to one of their other properties!  We were told we could force him to bring the fence back, but we were tired of fighting with the owner to get the house done.  We had enough.  We wanted out of the deal!!!

 And that is another story for another day… .


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